After rising for the third straight day in Thursday trading oil futures continued to trade slightly up at around the $49 a barrel mark in Asia, as regional share markets remained relatively consistent and fundamental stayed weak.
The U.S.’s benchmark light, sweet crude for June delivery was up $0.31, to $49.93 a barrel in late afternoon trading in Singapore, in electronic trading on the New York Mercantile Exchange (NYMEX).
In London, Brent North Sea crude jumped by $0.20, up to $50.31 a barrel on the ICE Futures exchange.
Oil prices had seen a modest rise this week as traders have interpreted a rebound in the U.S. stock market to signal that the economic recession’s nadir may have passed.
In term of prices, April has been the most stable month that oil traders have seen for some time. It appears that the market has yet to act, and is waiting to forecast as to when the succession of massive government bailout packages will begin to reverse negative economic growth in countries across the globe.
Oil has seen occasional support from equities and a weakening dollar; but gains are often quickly retracted by the underlying factor that consumer demand remains severely down, and simultaneously inventories continue to be on the increase.
Falling demand in the world’s leading oil-consuming nations is inextricably linked with crude’s $100 fall from grace, from it record $147 high seen last July.
Victor Shum, energy analyst with Purvin & Gertz, Singapore, said: “The price has been fairly resilient at the $50 level given the oil market fundamentals in the near term are very negative.
“More bad macroeconomic or company news could pull down oil. If it goes down toward $40, it would put pressure on OPEC to cut,” he added.
The Organisation of Petroleum Exporting Countries (OPEC), the 12 member nation cartel who produces around 40% of the world’s oil, has to date cut its output quotas by 4.2 million barrels per day (bpd) , in an attempt to prop up prices. The Vienna-based group is set to meet again on May 28, where it may yet announce further cuts to its output.
Gloom in the market was further compounded this week by the International Monetary Fund (IMF) forecasting a severe global contraction this year, projecting that the global economy would shrink by 1.3% percent before the year end.